Unpaid Bills to Matter Less for Credit Scores

Changes are coming to the FICO credit-scoring system, potentially allowing millions of people to take out loans.

The Wall Street Journal reports that Fair Isaac (FICO), which produces the FICO score, will no longer include failures to pay bills when calculating a score if the issue has since been resolved. The tabulation also will take unpaid medical bills less into account, according to the Journal.

These changes -- which are meant to stimulate consumer lending -- are the result of discussions between Fair Isaac, the Consumer Financial Protection Bureau and lenders, the Journal reported. Out of the 106.5 million Americans with a payment collection on their report, 9.4 million had no current balance, which means their credit scores will be bolstered by the new system, according to the Journal.

Still, not everyone supports the changes. "A lot of people really just can't handle credit -- you're not really helping them by allowing them to dig themselves into debt," Howard Strong, a California lawyer specializing in consumer-protection class-action lawsuits, told the Journal. "It's like a sharp knife -- if you don't know how to use it, you can cut yourself."